What Is a Roth IRA?
A Roth IRA lets you contribute after-tax dollars that grow and can be withdrawn completely tax-free in retirement. In 2026, the contribution limit is $7,000 ($8,000 if 50+). Income limits apply: single filers must earn under $161,000 for full contributions.
Roth IRA vs Traditional IRA
With a Traditional IRA, you get a tax deduction now but pay taxes on withdrawals. With a Roth, you pay taxes now but everything — contributions AND growth — comes out tax-free after 59½. If you expect higher taxes in retirement, Roth wins.
The Power of Tax-Free Growth
$7,000/year invested for 35 years at 7% grows to over $1.1 million — all tax-free. The same amount in a taxable account at a 22% tax rate would leave you with roughly $860,000 after taxes.